weekend update


An eventful holiday shortened week. The market started the week on Tuesday at SPX 1865. After gap up openings on Tuesday/Wednesday the SPX reached 1931. After that it pulled back to 1902 on Friday. For the week the SPX/DOW gained 2.7%, NDX/NAZ gained 3.7%, and the DJ World index gained 3.8%. Economics reports for the week were again biased negative. On the uptick: the PPI, industrial production, capacity utilization, GDPn, plus weekly jobless claims were lower. On the downtick: NY/Philly FED, NAHB, housing starts, building permits, leading indicators and the WLEI. Next week we get the second estimate to Q4 GDP, the PCE, and more housing reports.

LONG TERM: bear market

We continue to see the market activity over the past several months as bearish long term. We have counted a five primary wave advance from March 2009 to December 2015 to end Cycle wave [1]. Primary waves I and II ended in 2011, and Primary waves III, IV and V ended in 2015 with a fifth wave failure. Initially we had a difficult time recalling a fifth wave failure that ended a bull market. After reviewing historical charts we observed it had occurred just once before: during the 1949-1953 bull market.


Now that we know we are not dealing with something new we can look ahead. During the entire 20th century there were only two Cycle wave bear markets: 1937-1942 and 1973-1974. Those two bear markets created the largest market losses of the entire 1932-2007 Super cycle period: 52% and 47% respectively. This is the main reason we are expecting this bear market to produce a 45% to 50% market loss. The wave structure of the bull market, and a 61.8% retracement of the bull market also support this scenario.

When five wave advances have weak fifth waves, support usually appears between the high of wave 1 and the low of wave 2. In this case between SPX 1371 and 1075. A 61.8% retracement of the entire bull market also falls into that range at SPX 1228. As does a 45% to 50% market loss: SPX 1174 to 1068. Our bear market target is approximately SPX 1100 by sometime in 2017.

MEDIUM TERM: uptrend likely underway

After the unorthodox high at SPX 2104 to end the bull market, we counted a choppy five waves down into the recent low at SPX 1810. We had noted last weekend there were several technical indications that the Major wave A downtrend had ended. We then projected three areas where a Major wave B uptrend could top out: the 1956 and 1973 pivots, plus SPX 1999.


After that low the market rallied to SPX 1865 to end the week. Then continued higher to 1931 by Wednesday this week. We counted this entire advance as five waves, and likely Intermediate A of Major wave B: 1836-1822-1888-1875-1931. After reaching that high on Wednesday the market pulled back into Friday hitting SPX 1902. While we believe this pullback, Intermediate wave B, could decline further into the 1880’s. It has already done enough to label SPX 1931 as the high of Int. A. When the current pullback concludes, the market should again rally to one of the three levels noted above to complete the uptrend. This could/should occur by early March. After that, Major wave C should take the market to new lows for the bear market. Medium term support is at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots.


As noted above we had counted five waves up from SPX 1810 to 1931. At the high we observed the first short term negative divergence of the entire rally, and immediately the market started to pullback. At Friday’s SPX 1902 low the market did get slightly oversold. But we would expect Intermediate wave B to get more oversold than that before it concludes. A pullback into the SPX 1880’s would fit. Then a rally to the 1956 or 1973 pivots should end this unconfirmed uptrend.


Short term support is at the 1901 and 1869 pivots, with resistance at the 1929 and 1956 pivots. Short term momentum ended the week at neutral. Best to your trading next week!


The Asian markets were mostly higher gaining 4.2% on the week.

European markets were all higher also gaining 4.2%.

The Commodity equity group were all higher too, gaining 5.5% on the week.

The DJ World index gained 3.8% on the week.


Bonds continue to uptrend but lost 0.1% on the week.

Crude is trying to uptrend and gained 9.4% on the week.

Gold is in an uptrend but lost 0.6% in a volatile week.

The USD is still in a downtrend but gained 0.7%.


Tuesday: Case-Shiller, Consumer confidence, Existing homes sales and a speech by FED vice chair Fischer. Wednesday: New homes sales. Thursday: weekly Jobless claims, Durable goods, and FHFA housing. Friday: Q4 GDP (est. +0.5%), Personal income/spending, PCE prices, Consumer sentiment and speeches from FED governors Powell and Brainard. Best to your weekend and week!

CHARTS: https://stockcharts.com/public/1269446/tenpp

About tony caldaro

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343 Responses to weekend update

  1. Page says:

    SPX is extremely overbought.

  2. Have to say it s pretty amazing (bullish?)to see gold down $21 and GDX up 1.3%.Never would ve thunk it.As i ve always heard…GDX leads gold most of the time.Still to see this is eye opening.

  3. stmro says:

    What a boring day. Guess we have to wait until the Asian and European sessions to see it gap up another 20 pts 😉

  4. simpleiam says:

    The end of numerous C waves have been short of the preceding A wave or just about even with it. This upcoming C really needs to break below A in a substantive way. Would like to see it 1750ish or less.

  5. chrisk44342 says:

    hourly vix reversal commencing now

  6. uncle10 says:

    Thanks Tony. Back to our old friend SPX 1950.
    Taking off most of my longs. half off oil long trade, and starting to play in the natty gas sand box. 🙂
    gl all.

  7. blubrd67 says:

    Tony, at this point are you inclined to believe that this is still Intermediate A not done… or we are done with A and B, into intermediate C already?

  8. jobjas says:

    ES 1944 completes 5 wave up from 1810 to complete C of wave 4 . Next target 1780

  9. uas2014 says:

    Hi Tony, Can you see a slight negative divergence on spx 60 min?

  10. aahmichael says:

    I realize that there is a lot of excitement on this blog about the market going to infinity, but by my count, we just completed a flat ABC from the 1/20 low. This is one of the most basic of all EW patterns, and it’s baffled me how excited folks here got over the last 5 trading days. I label this the completion of a B wave, and if correct, then the next wave down will take out the 2/11 low and beyond.

  11. mjtplayer says:

    Another day where most of the gains were on the gap-up open, then just a sideways drift on low volume. In fact, volume is a complete joke.

    Another day of “gap and drift”.

    • johnnymagicmoney says:

      remember I said VIX was going to high teens? =)

      • mjtplayer says:

        Remember I said the VIX would hold the 20 support area (19 – 21)?

        The early Feb rally the VIX bottomed at 19.50; today’s low is 19.02 Both rallies are still holding within the VIX support area. Though today is a bit more than I expected, didn’t think we’d break through the mid 19’s. I still don’t think the VIX breaks into the 17’s or lower till primary B. We’ll see…

        I think today or tomorrow will be the high in the market, full moon tonight as we head into turnaround Tues. What’s interesting is that the SPX has not tested/broken the Feb high of 1,947.20

        Off SPX 1,812 we got a 135pt rally to 1,947
        From SPX 1,810 we’ve now rallied….wait for it….135pts to 1,945

    • NEWBIE says:

      This is a wave 2 up before a monster 3 down that is going to destroy the complacent.

  12. johnnymagicmoney says:

    interesting thing to note. Facebook closed its gap from late January and now is back in an uptrend. Microsoft closed it big gap from October 15 and now is making tis way back up. Google came within a smidgen of closing its gap (like 1/2%) of October 15 and now is moving back up.

  13. gtoptions says:

    Thanks Tony

    “We then projected three areas where a Major wave B uptrend could top out: the 1956 and 1973 pivots, plus SPX 1999.”

  14. OneAndOnlyUniverse says:

    Tony ,
    Simple question , What is the highest level on the $spx that OEW would permit this rally to travel ?
    Ex- 2046 would be ok and not change your bear market.


  15. How high does Int. C have to go here? Could 1945 be it, or do we have to push up to at least the 1956 pivot? I’m not a EW expert.

  16. Page says:

    VIX is about to take off.

    • What makes you say that Page? I see it going to 18 and SPy going to 1970-1980

    • Jim Guthery says:

      it’s about to take off to the downside!

    • johnnymagicmoney says:

      thing that worries me is VIX just broke out of its channel to the downside and looks like its heading down to mid teens. Also, the upper trend line on the S&P has been like a friggin magnet since the ATH. I am surprised no one brings this up here. Wouldn’t be shocked if Janet the money whore paused, Mario the retarded jawbone jawboned more, oil whores jawboned more about futile production cuts, and Abe jawboned even more pushing this up to 2020-2040 confusing bulls and bears and then ka-boom falling apart. The lack of volatility and the market’s refusal to let any dip go unbought worries me. Tony was looking for a big B wave in the fall of 14 and the market went to all time highs Once the market hit all time highs he started calling for possible S&P targets of 2500 and this lasting possibly into 16/17. The market rolled over and in the Fall of 15 in a big way instead. After the double bottom at 1867/1872 Tony called for new all time highs and of course that never happened. Recently Tony called for the last time we were up at 1947 to be the last chance to get out before the market hit lower lows for Major C. That proved to be futile when we held at 1810. Now he is calling for 1956/1973 and I wouldn’t be surprised to see 2040. I soooo appreciate everything Tony does – very magnanimous of him and I realize he says to adjust along the way but what I mentioned have been some major major wrong calls. These aren’t little minor waves we are talking about – these are primary wave mistakes and whatnot. Just saying this market action over the last week worries me that I shouldn’t be short here and that something is making the counts extremely difficult for Tony to count unlike any other time. I am just a newbie here so what the F do I know. No offense Tony just want to be on the right side like everyone else.

      • Jim Guthery says:

        Hence tight stops..

      • rc1269 says:

        thing that worries me is VIX just broke out of its channel to the downside and looks like its heading down to mid teens.

        just like March-May 2008…

        • simpleiam says:

          rc, YES, THANK YOU! People need to get off this VIX watch as a forecasting indicator of where the markets are going. VIX is a laggard, and responds during, and after the markets move.

          • johnnymagicmoney says:

            can you not chart just about anything? Whether its a laggard or not why isn’t the VIX breaking its trend line relevant? maybe there are other indicators that are more telling but VIX is helpful as an additional thing to take into account is it not?

          • simpleiam says:

            Johnny, no, it’s not helpful if you’re using it strictly as a forecasting tool. Certainly it can be charted, and should be. Comparisons can be made, and estimates of highs and lows, dependent upon other forecast models, or earlier market moves; also dependent upon whether smart money has left the market or not. Ex. Most money was caught off-guard in 2008/2009; since much of the money is now already being moved into Bear funds, Bonds, etc., it’s likely to take a longer time, and a greater fall in stocks prices for VIX to react. JMO.

        • johnnymagicmoney says:

          not saying this isn’t a bear. Just saying I wouldn’t be shocked if this rally went much higher than what Tony is saying or most on here. This market is not acting like its ready to stop at 1956/1973. DOW looks especially good here. S&P close to busting out, VIX just rolled over like a dog

      • Keep looking at the monthly MACD.That tells you everything you want to know.It s down from 150 to 60.This is much more than 2011.That s the key for me.

        • johnnymagicmoney says:

          I get that …………..I don’t try capturing the day to day, week to week, but intermediate to longer term trends. I believe in my heart this is a bear both technically and fundamentally. I am just saying that if it were to get to 2040 Id be upset I hedged a little early. In the whole scheme of things hedging there or here doesn’t make too much of a difference but every bit helps.

          • simpleiam says:

            I understand. Even if you think this is a Bull, I have no problem with straight-forward opinions. From your note, you do seem to be using VIX in a way which might cause some confusion. As I said, JMO.

      • valunvstr says:

        The VIX is such a volatile security it’s really not worth looking at ma and channels. The VIX is confirming what I’ve been saying for a week. The shorts are gettig squeezed. So just like the retails Rydex bear buyer is now going to become a seller, the buyer of vix protection is now selling it. It’s bearish, not bullish. Give the market 1-3 weeks and a tag of the 100 or 200 day moving average.

  17. OneAndOnlyUniverse says:
  18. Can the VIX trade below 20 in a bear market?

  19. Lee X says:

    Who has time to read Tonys updates in this fast pace world of blogs with anonymous hosts so here’s a picture to look at .

  20. bud67 says:

    Thank You – Tony…

  21. bud67 says:

    BoYu – aborted a 2/18 Sell signal. SP
    continues to be up into the 1945-1959
    resistance level…IMO….
    If you would like to be on my email list.
    re-add your email to bud_67@hotmail.com.

  22. rc1269 says:

    raise your hand if you still don’t see any correlation between crude and spx

    • SPX is 15+ points above last weeks high, CL not yet. How are you interpreting that?

      • rc1269 says:

        that’s an unecessarily precise requirement for determining correlation, IMO. seems like you’re looking for them to be ‘the same’, which they’ll never be.
        the way i interpret it is: they both bottomed on 2/11 and have being going from the lower left to the upper right since then and the green and red days have essentially matched up.
        i think we just have different definitions of correlation is all.

        • aahmichael says:

          Actually, it’s so much more than that. Just going back 2 months, anyone with a functioning set of eyes should be able to see that they both hit a bottom on 12/14 and again on 12/21. Then they both went into free fall starting on the first trading day of the year, until they both bottomed on 1/20. Then they both hit a secondary high on 2/4, and then they both double bottomed on 2/11. The charts are identical for this time period.

        • H D says:

          agree, just an observation, they do appear similar but in no way should you look at oil and say SPX will trade xyz as a result… I see CL struggling with the old $34, that in no way led to SPX resistance on any time frame. Now if SPX sells off, in hindsight, everyone will say oil never broke out and struggled at $34. :mrgreen:

  23. stmro says:

    There is no way it’s going to top today. Wait for it to retrace and make a higher high on weaker internals. That will be the signal to reshort. Was originally planning to short at 1950, but given the strength of the bounce i think it can easily get to 1980.

    • valunvstr says:

      I know I’m a broken record but it’s not like everyone reads every post. Sentiment is VERY BEARISH with flows in RYDEX BEAR funds skyrocketing even during the rally. The dumb retail money has to get squeezed, which is likely beginning today before the topping “process” can even start. 200 day ema or sma is going to get hit. 2000ish with maybe a peek a boo to the 2020 area. Then down we go again.

  24. jp7972 says:

    Hi Tony,

    You wrote ” A pullback into the SPX 1880’s would fit. Then a rally to the 1956 or 1973 pivots should end this unconfirmed uptrend.”

    Do you think Maj B will conclude without being confirmed, or do your OEW rules say that if it isn’t confirmed then it isn’t major B? How high would we need to go for confirmation?

    Hope you can answer without giving away your proprietary recipe!



  25. mjtplayer says:

    What do you think Tony? This mornings gap-up will make new rally highs, was the 30pt pullback enough for int B by your work or is this still an ongoing int A?

  26. rc1269 says:

    Looks nearly identical to Aug-Oct (to me), still. the double bottom bounce script remains in effect, until it doesn’t.

    -blackjack, regarding this:
    “If this is a bear market, the bears should not be non-existent for 6 days”

    we were only green on the close for 3 days, fwiw. we rallied to 1932 then sold off 30 pts, giving us a down day and a flat day out of the last 5. search back through March – Aug 2008 and you’ll see at least a couple instances of equally strong/sustained rallies.

    this i would say is not an atypical pattern. 3 strong days up, 2 days to consolidate, then perhaps 2-3 more green days before things start to get a little choppier again. i would not be surprised by a “tuesday turnaround”

    if not, well then we might be looking at something different.

  27. Millan Tomic says:

    As expected we reached levels where behavioural biases start to creep in. This is the stage where the biggest mistakes are made as bears start to question their thesis while bulls are getting less worried and believe in the return of the bull market. The dreaded bear market rally.

    It is actually pretty simple binary test as i have written before: 1) If one believes that USD has made a multiyear top already, then 2135-1810 was P4 rangebound consolidation and P5 is about to start; and 2) If one believes that USD has further to go (as I do), then this is the high probability bear market rally which in order to frustrate the majority of investors (as market always does) will go as high as possible (my take is 2000 base case and 2040 best case).

    In both cases, direction was supposed to be up anyway, high probability

    • rc1269 says:

      “As expected we reached levels where behavioural biases start to creep in. This is the stage where the biggest mistakes are made as bears start to question their thesis while bulls are getting less worried and believe in the return of the bull market.”

      agree, strongly

      • BDUBS says:

        Totally concur with the bias comment and while i’m not really schooled in wave counts, it seems to be an interesting level to short the es @1135, as we haven’t really made a higher high to, in my mind, buy into the “double bottom” scenario. Sentiment seems to be swinging from bearish to bullish quickly.

    • magnus1234 says:

      Agree with your binary test to 100%. But I believe the high of USD is in. Meaning we are in P4. DAX looks very much as P4 IMHO and ECB/FED still have their PUTs in place.

  28. Gold continues working off the 97 RSI and money is going into stocks pure and simple from gold and bonds.Gold could and should head to 1160-1170 & it s normal for a 15 day consolidation before a reversal up.IF the cup and handle is valid on both gold and silver-a rise over 1300 and probably a reversal of equities simultaneously should occur.GDX tagging along.A gap of 15.31 gets filled or not is my question but if it does and takes off from there–very bullish.Good luck all.

  29. blackjak100 says:

    Once again, it seems like old times again waking up to green futures market with no volaitily. Isn’t it ironic the day the market closed at a 22 month low and confirmed a DOW theory sell signal, the market has ripped the face off of bears?

    I believe today is the first day where the bear market script COULD change. You’re probably going to have a daily chart more overbought than it should be. You’re probably going to have a VIX lower than it should be. We will probably not breach the 50dma today, but the way we are rallying is different. The bears have been non-existent mustering only a 29 pullback so far. This is odd bear market behavior and really didn’t occur during Primary B in 2008. PB was a stair stepping 2 month event. Even OEW expected a pullback to 1885 first.

    Am I declaring P4 underway yet? No, despite the unusual bear market metrics we might see the market still has more to prove first. Maybe we make a high today, fall short of 1947 & 1950, and head lower immediately starting tomorrow. GL & Cheers!

    • stephenk1980 says:

      Yes but this is still Primary A according to Tony,, so not sure if that comparison with B is valid. As I said just before the turn, a P5 scenario is still not in the bin for me if the market turned there at 1800, which it did: however, I still think it unlikely . If we even touch 1947 (which I don’t think we should and hence have quit my longs now), then it gains significantly more credibility. Any breach of 2008ish and it becomes more likely than unlikely. Just my 2p

    • valunvstr says:

      This rally is not different than the October rally. Market got overbought and stayed that way. Then rolled over. My goodness. Have some conviction and stop being so “retail”. it’s a bear market rally.

  30. argento1 says:

    Thanks Tony for the excellent weekend update! Should see a top today (pierce of the 60min upper bb) for a nice drop into later this week to conclude the Int B wave as Tony mentioned and set up a nice pattern to rally back up into the 1973 zone early March to conclude the uptrend!


  31. OneAndOnlyUniverse says:

    “Crude is trying to uptrend and gained 9.4% on the week.”
    It was up 2.5% , gap was due to contract roll

  32. stan502 says:

    ES rocking out of the gate, have the sign up link to this mornings 8 am-9:30 EST Hurst Cycle Conf call on our blog if you have any interest https://stanraksin.wordpress.com/2016/02/22/tickers-17/

  33. M1 says:

    My preferred and count # 1 has been suggesting for months that NAZ is still in a bull market (long term). However, It is important to note that this index was at an inflection point on Feb 12th IMO.
    But rallied more than 300 points from those lows in the past two weeks
    Last weekend I mentioned that the short term chart, count and pattern was suggesting an important low had been hit and a nice rally in the coming weeks. See the same today. So I will publish only the bullish counts this week once again

  34. simpleiam says:

    Great Update as always, Tony! Thank you! Will be interesting to see what Crude does next week, as up to now, indices are likely to follow. GL All!

  35. opader says:

    Thx Tony for ur update. My thoughts: http://www.balancetrading.org/

      • opader says:

        I think oil will bottom out between now and mid to late March. After that I expect a big surge upward in a very short time. Outside of trading oil futures, UWTI would be the best way to capitalize on that surge.

        • simpleiam says:

          You need to tell this to the Execs of my Corporation. They believe it’s only going to be a bounce, then, right back down.

          • opader says:

            I think a short lived surge for oil could happen at any point simply b/c of ME geopolitics. For example, if ISIS starts blowing up things in Saudi Arabia (chickens coming home to roost), I could oil jumping a good 20% to 30% over night.

            In the long run, however, I think ur executives are right if they think that oil would be trading somewhere between $25 to $35 for the next five years.

          • simpleiam says:

            opader, when you use the word “surge”, and then qualify it as you have above, that’s closer to a Black Swan event, and has no basis in regular charting. Crude will rise a bit as Summer is on its way and refineries have to account for switch-over, etc. It always does this.

  36. fishonhook says:

    Anyone have an alternate count that has us going down from here
    Or do all counts need is to go higher first?
    Sold my SDS that I posted about buying here for a reasonable profit
    ( dinner out a reasonable wine not beer)
    But hold some SDS calls

  37. ajaysinghi says:

    Can you please repost that note you posted last year??

    Many thanks,


  38. mike7x says:

    Thanks Tony! New Uptrend? What about a double bottom also? Hmmm…FWIW:

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